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What Traders Can Learn From Super Bowl Sunday

Are you a trader or a gambler? If you're not careful, you may be both.

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Apple and the Super Bowl

Anyone who has ever bet football, or any other sport for that matter, knows the lure of the Super Bowl. It’s big, people are talking about it, and you can watch your bet play out in real-time.

Obviously, that doesn’t make the Super Bowl a good bet – but that usually isn’t a deterrent to the undisciplined gambler.

This same issue crops up in trading because of the media attention lavished on certain high profile stocks. Think of the hours of TV programming and countless articles devoted to the simple question of whether or not Apple (AAPL) is a buy.

But why should traders care? Apple is no more or less likely to offer a trading opportunity in any given month than an under-the-radar mid-cap energy stock.

Just as obscure major league baseball games offer better value opportunities than the Super Bowl, so too can stocks with a smaller following be more profitable than the Apples of the world. From a trading standpoint, there really shouldn’t be a distinction between Apple and Weatherford International (WFT).

Unfortunately, many traders trip themselves up on this simple aspect of the equation.

Go against the grain

Experienced gamblers know that there’s much more money to be made by being a contrarian than by trying to bet on the most popular teams. The betting public tends to overrate the teams that they see on TV and hear about most frequently, while underrating those that are less popular. This is reflected in point spreads and betting lines, so bettors who back the popular team will have to pay a premium to do so.

Sound familiar?

In sports gambling, some of the best plays are often big underdogs where bettors can get a value vs. the betting public. Similarly, traders who go against the grain rather than playing with hot stocks – and hoping they can unload their position to the greater fool before the negative headlines hit – will see better trading results over time.

Adopt the right mindset

One of the best articles you’ll ever see on successful sports betting is this piece by the publisher Harriman House promoting a book titled “Sports Betting To Win – The Keys To A Winning Mindset” by Steve Ward. The author cites key components of successful sports gambling, including taking personal responsibility, accepting losses, managing risk, and focusing on “getting rich slowly.”

Again, if this sounds familiar, it’s because it is – traders know that this approach, along with several other points cited in the article, is critical for success.

The kicker comes at the very end, when we learn that the author also coaches traders and is the author of a second book titled “High Performance Trading – 35 Practical Strategies and Techniques to Enhance Your Trading Psychology and Performance.”

If anything helps illustrate the link between the two worlds, it’s this. And it also provides a lesson: just as gamblers can take a value-oriented approach of the stock investors, traders can easily reduce their activities to gambling if they approach the market the wrong way.

Keep this in mind as you sit down to watch the Super Bowl on Sunday night – especially if you’re among those who took the 3-1 odds and bet that it snows during the game.

Article printed from InvestorPlace Media,

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